Mar 21 2008
Speculation in the Commodity Markets Immoral?
In recent months, I have come to the conclusion that speculation in the commodity markets (i.e. Futures, Options, and other instruments) is no longer a good thing. In the past it was used to lock in prices by being a hedge against inflation. These days, people are using it to prey on people fears to get rich.
The oil market is one good example. In recent months the speculators have been a major part of the rise in oil prices by bidding up the price. I have seen reports where analyst have said that speculation is pricing oil as much as $30 to $40 over where it should be. Just in the last couple of days, though, the price has dropped dramatically when these same “investors” dumped their positions. This speculation, in my opinion, is one reason why gas prices have been fluctuating wildly.
The same thing is starting to happen in food prices. With the talk of alternative fuels driving up prices of certain grain prices, people are panicking about food prices. You never hear about the research and use of non-food materials for the alternative fuels.
Has speculation turned into something immoral?
